Tesco bosses, struggling to secure planning permission for an extension of their Stretford store, offered to buy an unused plot at a nearby high school for £20m more than its worth – if the cash was ring-fenced for the cricket club.

The land-deal was met with fury by Labour councillors.

Coun Western said: “Once again, the council finds itself in the position of being asked to provide financial support to Lancashire County Cricket Club just a few years after gifting some £21m to the club to furnish its recent redevelopment.

“Although I appreciate that on this occasion, we would be talking about a loan rather than a gift, it does concern me that a private business should need to come to the council once more for assistance.

“If this proposal is as sound as is being suggested, the club would be able to source a bank loan for the amount required independently.

“I do not believe the council should be expected to help them out to the tune of millions of pounds yet again at a time of continued austerity.

“I would much rather see investment in the local economy used to support small and medium-sized enterprises who are struggling to access lending in what continues to be a difficult financial climate.”

The council has to cut £21.5m from the books this year.

Leader Sean Anstee said the project will create nearly 80 jobs and bring in an extra £2.3m a year for the borough.

He highlighted that the town hall will make money thanks to interest on the loan, and that council borrowing cannot be used to mitigate service cuts.

Coun Anstee, who also highlighted that the plan is backed by Labour leaders across the region, added: “The choice isn’t whether we want to borrow to fund services.

“It’s whether we use prudential borrowing to support and boost growth. We can continue in austerity and do nothing; or we can choose to lend this money, create jobs and bring an extra £2.3m in. This will cost the taxpayer nothing.”

We’ve all seen the ads. “Need cash fast?” a speaker asks. “Have bad credit? You can get up to $1,000 within 24 hours.” The ad then directs you to a sketchy-sounding website, like 44cash.com, or a slightly-less-sketchy-sounding business, like PLS Loan Store. Most of us roll our eyes or go grab another beer when these commercials air. But 12 million people a year turn to payday lenders, who disguise the real cost of these loans. Borrowers often become saddled with unaffordable loans that have sky-high interest rates.

For years, states have tried to crack down on these deceptive business practices. Now, the Consumer Financial Protection Bureau (CFPB) is giving it a shot. On Monday, the New York Times reported that the CFPB will soon issue the first draft of new regulations on the $46 billion payday-lending industry. The rules are being designed to ensure borrowers have a better understanding of the real cost of payday loans and to promote a transparent and fair short-term lending market.

On the surface, payday loans sound like a good idea to many cash-strapped Americans. They offer a short-term loan—generally two weeks in length—for a fixed fee, with payment generally due on the borrower’s next payday. The average borrower takes out a $375 two-week loan with a fee of $55, according to the Pew Charitable Trust’s Safe Small-Dollar Loans Research Project which has put out multiplereports on payday lenders over the past few years. But payday lenders confuse borrowers in a couple of ways.

First, borrowers are rarely able to pay back their loans in two weeks. So they “roll over” the payday loan by paying just the $55 fee. Now, they don’t owe the $375 principal for another two weeks, but they’re hit with another $55 fee. That two-week, $375 loan with a $55 fee just effectively became a four-week, $375 loan with a $110 fee. If, after another two weeks, they still can’t repay the principal, then they will roll it over again for yet another $55 fee. You can see how quickly this can spiral out of control. What started as a two-week loan can last for months at a time—and the fees borrowers incur along the way end up dwarfing the principle. Pew found that the average borrower paid $520 in fees for the $375 loan, which was rolled over an average of eight times. In fact, using data from Oklahoma, Pew found that “more borrowers use at least 17 loans in a year than just one.”

Second, borrowers are often confused about the cost of the loan. The $55 fee—payday lenders often advertise a fee of $15 per $100 borrowed—sounds like a reasonable price for a quick infusion of cash, especially compared to a credit card with a 24-percent annual percentage rate (APR). But that’s actually an extremely high price. Consider the standard two-week, $375 loan with a $55 fee. If you were to roll that loan over for an entire year, you would pay $1,430 in fees ($55 times 26). That’s 3.81 times the original $375 loan—an APR of 381 percent.

Many borrowers, who badly need money to hold them over until their next paycheck, don’t think about when they’ll actually be able to pull it back or how many fees they’ll accumulate. “A lot of people who are taking out the loan focus on the idea that the payday loan is short-term or that it has a fixed $55 fee on average,” said Nick Bourke, the director of the Pew research project. “And they make their choice based on that.”

Lenders advertise the loans as a short-term fix—but their business model actually depends on borrowers accruing fees. That was the conclusion of a 2009 study by the Federal Reserve of Kansas City. Other research has backed up the study’s findings. “They don’t achieve profitability unless their average customer is in debt for months, not weeks,” said Bourke. That’s because payday lending is an inefficient business. Most lenders serve only 500 unique customers a year, Pew found. But they have high overhead costs like renting store space, maintaining working computers, and payroll. That means lenders have to make a significant profit on each borrower.

It’s also why banks and other large companies can offer short-term loans at better prices. Some banks are offering a product called a “deposit advance loan” which is nearly identical to a payday loan. But the fees on those loans are far smaller than traditional payday loans—around $7.50-$10 per $100 loan per two-week borrowing period compared with $15 per $100 loan per two-week period. Yet short-term borrowers are often unaware of these alternatives. In the end, they often opt for payday loans, which are much better advertised.

The CFPB can learn a lot about how to (and how not to) formulate its upcoming regulations from state efforts to crack down on payday lenders. Fourteen states and the District of Columbia have implemented restrictive rules, like setting an interest-rate cap at 36 percent APR, that have shutdown the payday-loan business almost entirely. Another eight states have created hybrid systems that impose some regulations on payday lenders, like requiring longer repayment periods or lower fees, but have not put them out of business. The remaining 28 states have few, if any, restrictions on payday lending:

The CFPB doesn’t have the power to set an interest rate cap nationally, so it won’t be able to stop payday lending altogether. But that probably shouldn’t be the Bureau’s goal anyways. For one, eliminating payday lending could have unintended consequences, such as by driving the lending into other unregulated markets. In some states, that seems to have already happened, with payday lenders registering as car title lenders, offering the same loans under a different name. Whether it would happen on a large scale is less clear. In states that have effectively outlawed payday lending, 95 percent of borrowers said they do not use payday loans elsewhere, whether from online payday lenders or other borrowers. “Part of the reason for that is people who get payday loans [are] pretty much mainstream consumers,” Bourke said. “They have a checking account. They have income, which is usually from employment. They’re attracted to the idea of doing business with a licensed lender in their community. And if the stores in the community go away, they’re not very disposed towards doing business with unlicensed lenders or some kind of loan shark.”

In addition, borrowers value payday lending. In Pew’s survey, 56 percent of borrowers said that the loan relieved stress compared to just 31 percent who said it was a source of stress. Forty-eight percent said payday loans helped borrowers, with 41 percent saying they hurt them. In other words, the short-term, high-cost lending market has value. But borrowers also feel that lenders take advantage of them and the vast majority want more regulation.

So what should that regulation look like? Bourke points to Colorado as an example. Lawmakers there capped the annual interest payment at 45 percent while allowing strict origination and maintenance fees. Even more importantly, Colorado requires lenders to allow borrowers to repay the loans over at least six months, with payments over time slowly reducing the principal. These reforms have been a major success. Average APR rates in Colorado fell from 319 percent to 129 percent and borrowers spent $41.9 million less in 2012 than in 2009, before the changes. That’s a 44 percent drop in payments. At the same time, the number of loans per borrower dropped by 71 percent, from 7.8 to 2.3.

The Colorado law did reduce the number of licensed locations by 53 percent, from 505 to 238. Yet, the number of individual consumers fell just 15 percent. Overall, that leads to an 81 percent increase in borrowers per store, making the industry far more efficient and allowing payday lenders to earn a profit even with lower interest rates and a longer repayment period.

Bourke proposes that the CFPB emulate Colorado’s law by requiring the lenders to allow borrowers to repay the loans over a longer period. But he also thinks the Bureau could improve upon the law by capping payments at 5 percent of borrower’s pretax income, known as an ability-to-repay standard. For example, a monthly payment should not exceed 5 percent of monthly, pretax income. Lenders should also be required to clearly disclose the terms of the loan, including the periodic payment due, the total cost of the loan (all fee and interest payments plus principal), and the effective APR.

The CFPB hasn’t announced the rules yet. But the Times report indicated that the Bureau is considering an ability-to-repay standard. The CFPB may also include car title lenders in the regulation with the hope of reducing payday lenders’ ability to circumvent the rules. However, instead of requiring longer payment periods, the agency may instead limit the number of times a lender could roll over a borrower’s loan. In other words, borrowers may only be able to roll over the loan three or four times a year, preventing them from repeatedly paying the fee.

If the Bureau opts for that rule, it could limit the effectiveness of the law. “That kind of tries to tackle a problem of repeat borrowing and long-term borrowing but that’s a symptom,” Bourke said. “That’s not really the core disease. The core disease is unaffordable payments.” In addition, it could prevent a transparent market from emerging, as payday lenders continue to take advantage of borrowers’ ignorance over these loans. “The market will remain in this mire,” Burke added, “where it’s dominated by a deceptive balloon payment product that makes it difficult for consumers to make good choices but also makes it difficult for better types of lenders to compete with the more fair and transparent product.” Ultimately, that’s in the CFPB’s hands.

EVELETH — The Iron Range Resources & Rehabilitation Board’s Loan Guaranty program for local businesses has received a $350,000 infusion from the agency’s Business Development Project Fund.

The program, which is an initiative of outgoing Commissioner Tony Sertich to provide more financial help for existing Iron Range small businesses, provides loan guarantees of up to $75,000 under certain guidelines.

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The city is hoping downtown property owners take advantage of a loan program to update the look of their buildings.

— image credit: Brian Beckley, Renton Reporter

Property owners downtown will have an opportunity to take advantage of a federal loan program next year, thanks to a change in how the City of Renton plans to use its Community Development Block Grant Funds.

The grants will be used as part of the city’s new Downtown Commercial Rehabilitation and Facade Improvement Loan Program to help private land owners improve their properties in hopes of bringing more retail businesses to the downtown core.

“We hope that this will be one of the tools that generate some interest downtown and will ultimately lead to new commerce,” said Community Development Block Grant Manager John Collum.

According to Collum, one of the issues the city is facing in trying to re-energize the downtown shopping district is the age and the look of the buildings. While Collum was quick to point out that there is not a whole lot of vacant space

downtown, the space that is available is “not attracting the pure retail” the city would hope because, he said, the spaces are just not what retailers are looking for.

The hope is that property owners will take advantage of the loan program to refresh the looks of their buildings, potentially as part of a larger project.

Collum said the loans feature “very favorable terms” and are designed to be used on any project that will affect the building’s facade, from painting and windows to signage, awnings and more.

“Anything that will be part of a project to improve the appearance of the building,” he said.

The loans can cover 50 percent of the total cost of the project, with a minimum loan amount of $10,000 (for a minimum project amount of $20,000). The loans are 0 percent interest loans. If the project is part of a larger rehabilitation, which is the hope, the loan money must be used for facade improvement.

Using CDBG money for a facade Improvement program is something new for the city. Prior to the upcoming budget cycle, CDBG money was used in human services, primarily in housing assistance.

The city has compensated for the removal of the CDBG money by increasing the city’s general fund contribution to human services so there is no gap in the housing assistance programs.

“This is just a matter of moving money from one pot to another,” Council President Don Persson said during a recent council discussion on the topic, adding that the change was a “win-win situation” since the money going to human services was not being cut.

Collum said a handful of owners and several tenants have already expressed interest in the program.

Collum said the city has $245,000 available through the program in 2015.

Salina — Predatory lending has emerged as a concern of the Catholic Church in Kansas.

In one of four election-year videos issued this week by the bishops in Kansas, Salina Bishop Edward Weisenburger asks Catholics to urge their state lawmakers to consider stricter regulations to protect vulnerable citizens. (To see all four videos, go to http://salinadiocese.org/home/religious-liberty.)

Catholic Charities of Northern Kansas has been working to help victims of predatory lending since 2007. It launched a new program last year, the Kansas Loan Pool Project, that offers a structured loan to qualified participants to help them escape extreme high-interest borrowing known as “payday” or “paycheck advance” loans.

Those lenders have moved aggressively into Salina, Hays, Manhattan, Junction City and Concordia. Online lenders can reach anyone with access to the Internet.

Catholic social teaching doesn’t prohibit the charging of reasonable interest on loans. However, it does consider exorbitant interest — usury — as wrong.

In the video, Bishop Weisenburger says usury is one of the practices “that are plainly harmful to the poor and simply contrary to the teachings of Christ.”

“It’s always been a Church teaching, but we never talk about it anymore,” added Michael Schuttloffel, executive director of the Kansas Catholic Conference, the public policy arm of the four Kansas bishops.

“Charging an unjust interest rate as being wrong was universal,” he said, but that has changed.

Even Pope Francis weighed in on the topic earlier this year, calling usury “a dramatic social ill.”

“When a family has nothing to eat, because it has to make payments to usurers, this is not Christian, it is not human,” the pope said. “This dramatic scourge in our society harms the inviolable dignity of the human person.”

Kansas is among 35 states that have few or no regulations on payday lending.

The Consumer Federation of America, an association of non-profit consumer organizations, reports that in Kansas, loans are capped at $500, with the finance rate and fees capped at 15 percent. Only two loans can be outstanding at one time.

An individual can secure a $500 loan with no credit or background check, using only proof of income, hence the “payday” or “paycheck advance” term. The loan typically is due in 14 days, with up to 15 percent interest charged, resulting in a balloon payment of $575.

Most borrowers can’t pay back the loan in full in 14 days, so a new loan is issued to pay off the first loan, with interest then charged on the new loan balance. That 15 percent interest rate on a two-week loan compounds to 390 percent over the course of a year.

“Every two weeks, it’s a brand new loan. That’s how they get away with it,” Humph­rey said. “Some people stay in it for over a year, some two years, some three years.”

Title loans use the vehicle title as collateral and typically must be repaid in a month. Although the loan usually is for less than the vehicle is worth, the borrower risks losing the vehicle if the loan isn’t repaid on time. The Consumer Federation of America says that for a typical title loan, annual interest can compound to 300 percent.

Payday lenders target people who likely can’t pay back the loan, Humphrey said. People who have good credit can go to a bank or credit union or even use a credit card for a cash advance, she explained.

Many payday borrowers are on fixed incomes and feel they have nowhere else to turn, while others with relatively good-paying jobs have expenses that exceed their incomes because they haven’t made smart financial decisions.

People don’t think about the consequences of a payday loan, even if they realize the risk.

“It’s hard to explain. It’s a horrible feeling” to be that desperate for cash, said Humphrey, who found herself in the same situation several years ago.

“You know you need the money, and here’s a place that will give it to you. All you’re thinking is, ‘I’m keeping the lights on,’ ‘I’m fixing my car’ … whatever it is,” she said. “You don’t think two weeks ahead.”

Humphrey said she was able to escape the cycle of trying to pay off two payday loans by asking her family for help. Many borrowers, however, don’t have that support system and have nowhere to go.

People have had their wages garnished, lost their vehicles or been evicted or had their utilities cut off, she said.

At least five clients have told Humphrey that if it hadn’t been for the Kansas Loan Pool Project, they would have considered suicide.

“This project literally, and sadly, has saved lives,” she said.

Catholic Charities first began working to help victims of payday lending in 2007. The Salina Area Savings and Education Loan Program, which still operates, combines funding from University United Methodist Church in Salina and loan processing by Bennington State Bank to offer short-term loans to help Saline County residents get out of high-interest debt and establish credit. Catholic Charities screens applicants for the loans.

But Catholic Charities wanted to expand the assistance throughout the Diocese of Salina, as well as offer one-on-one financial counseling and education for clients.

A grant from the Catholic Campaign for Human Development, facilitated by Catholic Rural Life, funded the administrative costs for the Kansas Loan Pool Project. The United Methodist Health Ministry Fund donated $25,000 and Catholic Charities fronted another $25,000 to guarantee the loans; that money is kept on deposit. Sunflower Bank of Salina agreed to administer the loans.

Initially, 18-month loans of $1,000 were available, but to help provide assistance to more people, loans have been scaled back to $700 for 12 months.

Once an applicant is approved, Humphrey meets with the borrower monthly to help craft a budget, ensure that loan payments are made on time and learn more about financial management.

That monthly connection is key to the program’s success, says Michelle Martin, executive director of Catholic Charities of Northern Kansas.

“No one else at this time is doing this,” Martin said of the case management her office is providing.

She wants to expand the program, but Humphrey’s time is consumed by the 32 open loans she currently manages.

“To do it right, we need to expand it to all of our 31 counties,” Martin said, but so far the funding isn’t available. The CCHD grant ends next June, so her staff is focusing efforts on trying to replace that funding first before looking for more money to expand the project.

Although there have been some loan defaults, Humphrey considers the program a success.

“One client paid off her loan, which raised her credit rating, and she was able to secure a conventional loan for a car without having a co-signer,” Humphrey said. The woman called Humphrey to share her good news.

Both Humphrey and Martin said there shouldn’t have to be a Kansas Loan Pool Project.

The 15 states that have restricted or banned payday lending have seen the amount of money owed by borrowers drop significantly.

The Pew Charitable Trust reported last October in the third of a three-part study that in Colorado, where lump-sum repayment was banned and replaced by installment payments over six months, borrowers paid 42 percent less annually than under the conventional model.

The Pew study found that 12 million people annually spend more than $7 billion on payday loans. On average, a borrower takes out eight successive loans of $375 each per year, spending $520 on interest.

Its survey found 5.5 percent of adults nationwide have used a payday loan in the past five years. In Kansas, that number is 8 percent.

In states where payday loans have been restricted, the Pew study found that most borrowers chose other options: They cut back on food and clothing expenses, delayed paying some bills, borrowed from family or friends, or sold or pawned possessions.

And, in the states that have restricted payday lending, borrowers have not sought similar loans through online sources, the Pew study showed.

The Pew study urges the 35 states that have few restrictions on payday lending to:

• Limit payments to an affordable percentage of a borrower’s periodic income. The Pew study indicates that payments above 5 percent of gross income are often unaffordable. One of Humphrey’s clients had a monthly income of $800 but had been approved for a second $500 payday loan while her first $500 payday was still active.

The Consumer Financial Protection Bureau, established by Congress, says it recognizes that demand exists for small-dollar loans.

“These types of credit products can be helpful for consumers if they are structured to facilitate successful repayment without the need to repeatedly borrow at a high cost,” CFPB stated in April 2013. “However, if the cost and structure of a particular loan make it difficult for the consumer to repay, this type of product may further impair the consumer’s finances.”

The federal government has stepped in by capping interest charged on loans to U.S. military personnel at 36 percent. However, states have the right to govern their own banking practices for non-military residents.

Both Schuttloffel, head of the Kansas Catholic Conference, and Martin of Catholic Charities say the likelihood of the Kansas Legislature taking any action is slim.

“The Legislature probably won’t do anything,” Schuttloffel said.

Martin said too many other issues, such as educational funding, have more importance in Topeka than helping victims of payday lending.

In addition, restricting lending practices is seen as anti-business, and under the current legislative environment, those issues tend to be off the table, Martin added.

“The federal government has capped the interest rate for military members, so it can be done,” Martin said.

Despite the lack of state regulation and uncertain funding for the Kansas Loan Pool Project, Martin and Humphrey are determined to keep the program operating.

“It’s the right thing to do,” Martin said. “There are too many people out there in need.”

Commenting on the success of the acquisition, Steve Spence, President and Chief Executive Officer, said: “The acquisition of the Orion project provides Osum with significant current production and cash flow. As well, we are pleased to welcome the high quality, experienced operating team members joining our organization today. We believe Osum has a unique opportunity to build a significant production platform from both Orion and our neighboring Taiga project in the Cold Lake region.”

The acquisition was funded from cash on hand and with the net proceeds of a new US$210 million Senior Secured Term Loan Facility to OPC (the “Term Loan Facility”). The Term Loan Facility has a maturity date of July 31, 2020 and an interest rate of LIBOR plus 5.50% with a 1.00% LIBOR floor. In addition, OPC has access to a US$15 million Senior Secured Revolving Loan Facility for general corporate purposes (the “Revolving Loan Facility”). Barclays Bank PLC and Goldman Sachs Lending Partners LLC acted as Joint Lead Arrangers and Joint Bookrunners for each of the Term Loan Facility and the Revolving Loan Facility.

Acquisition Highlights:

The Orion Project is located in the Cold Lake oil sands region, in close proximity to numerous major oil sands developments. It is approximately 18 kilometers SW of Osum’s Taiga Project, which has received regulatory approval for the construction and operation of a 35,000 barrel per day facility. The Project has been producing commercially since 2007 using the well-established Steam Assisted Gravity Drainage (SAGD) thermal heavy oil recovery technology. Second quarter production averaged approximately 6,800 barrels per day of bitumen from 22 well pairs. At forecast production rates, the Project is expected to have an economic life in excess of 25 years. Osum has 100% working interest and operatorship of the project.

Established in Alberta in 2005, Osum Oil Sands Corp. is a private oil sands producer focused on the responsible application of in-situ recovery technologies within Canada’s oil sands and carbonates. Additional information on the Company is available at www.osumcorp.com.

Cautionary Information and Forward Looking Statements

Certain statements contained in this press release may contain projections and “forward-looking statements” within the meaning of that phrase under Canadian and U.S. securities laws. When used in this document, the words “may”, “would”, “could”, “will”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, “expect” and similar expressions may be used to identify forward-looking statements. Those statements reflect management’s current views with respect to future events or conditions, including expected cash flows, expected production levels, and expected economic life of the Orion Oil Sands Project, retaining a high quality, experienced operating team, financial position, predictions of future actions or plans or strategies.

Certain material factors and assumptions were applied in drawing conclusions and making forward-looking statements. By their nature, those statements reflect management’s current views, beliefs and assumptions and are subject to certain risks, uncertainties, known and unknown, and assumptions, including, without limitation, assumptions about expected cash flows, expected production levels, and expected economic life of the Orion Oil Sands Project, retaining a high quality, experienced management team, production delays, changing environmental and other regulations, the ability to attract and retain business partners, the ability to exploit hydrocarbon resources with available technology, the need to obtain and maintain proprietary rights over aspects of the technology, competition from other technologies, the ability to access the capital required for project development, research, technology development, operations and marketing, changes in energy prices and currency levels.

Many factors could cause actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by these forward-looking statements. Should one or more of these risks or uncertainties materialize, or should the assumptions underlying the projections or forward-looking statements prove incorrect, actual results may vary materially from those described in this press release as intended, planned, anticipated, believed, estimated, or expected. Osum does not intend and does not assume any obligation to update these forward-looking statements whether as a result of new information, plans, events or otherwise.

The Company’s securities are not traded on any stock exchange and thus, Osum is not subject to regulation by any Canadian stock exchange. Osum is not a reporting issuer in Canada and its securities are not registered under the United States Securities Act of 1933. As a result, the Company is not presently subject to the reporting, certification or other requirements imposed on Canadian Reporting Issuers or U.S. registered issuers under, among other things, applicable Canadian securities legislation or the U.S. Sarbanes-Oxley Act of 2002 (“SOX”).

This release is provided for information purposes only and shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the common shares in any jurisdiction (including the United States) in which such offer, solicitation or sale would be unlawful.

Some two out of five Millennials—39%—prefer cash as the long-term investment for money they don’t need for at least 10 years, according to a new Bankrate.com report, roughly three times the number who chose the stock market. That’s a perilous pick, considering that cash will actually lose value over time due to inflation, while the S&P 500 has gained 17% in the last 12 months.

“What we are seeing is that Millennials actually get the importance of saving,” says Greg McBride, senior vice president and chief analyst at Bankrate. “They’re just not willing to take risks with it, particularly with regard to long-term savings.”

One thing that may explain the lean toward greenbacks is that Millennials came of age during tumultuous financial times. “When you look at the events of the last 10 to 15 years, with the financial crisis and the tech bust, young adults had a front row seat for one or both of those events,” McBride says. “Even if it didn’t impact them directly, they saw the impact it had on their parents and other family members and friends.”

That’s certainly the case for Alisha Nicole Washington, 22, who recently graduated from Vanderbilt University and started work for an advertising firm in Atlanta. “I prefer to keep my savings in cash,” she says. “Growing up, it seemed like that was the forefront of every media outlet—how poorly the market was doing. The images and reports definitely left a lasting impression.”

Watching the stock market tank and their parents struggle has left many Millennials with a poor appetite for risk—which is ironic, since they’re the age group with the most ability to be risky. Since Millennials have decades to go until retirement, they have plenty of time to recover from market dips. “Even with something as severe as the financial crisis, if you just hung in there and continued contributing throughout, you not only recovered your losses, but you came out well ahead,” McBride says. “That’s not a perspective that someone who’s only been investing for a couple of years necessarily has.”

Among other things, student loan debt may be hampering Millennials’ ability to think long-term. The average student loan debt now tops $29,000 per student, according to the Project on Student Debt, and many are borrowing two and three times that amount. Jenna Kusmierek, 30, manages to fund her Roth IRA in full each year, but the rest of her cash goes to her student loans. “I plan to proceed this way for the next 10 years until my $140,000 student loan bill is paid off,” says Kusmierek, who lives in Denver.

Then there’s convenience. For Jason Fisher, the 27-year-old co-founder of Waterway Financial Group in Myrtle Beach, SC, having quick access to his funds trumps saving money in a retirement account. “The reduced accessibility to cash is not attractive,” says Fisher. “Often, an investment for our age group tends to be much shorter term anyway. I think children, first homes, and other bigger purchases make having cash on hand more feasible.”

Unfortunately, Millennials are the generation that most needs to get aggressive with savings. “Today’s young adults have the biggest retirement savings burden of all time,” McBride says. “Their life expectancies are longer, their healthcare costs are going to be higher, they don’t have the pensions their parents did, and the future of Social Security is more uncertain than it’s been for any of their predecessors.”

In other words, Millennials need a bigger nest egg, and they’re not going to get there with cash in a savings account. “A key part of this is getting people to think long term, getting them to see the power of compounding over those longer periods of time,” McBride says.

Thankfully, not all Millennials are sticking to cash-only savings. “I keep a small emergency fund in cash, but beyond that, I invest everything I can,” says Kali Hawlk, 24, who runs the blog Common Sense Millennial. “The only way I’m going to grow the value of my nest egg is to invest it where it can earn reasonable returns.”

Of course, cash—in an interest-earning savings account—is the best way to save for emergencies and shorter-term needs. But for the long haul, the stock market is the better bet.

BEAM: Next Up Is Payday Loans

Payday loans will be a hot topic for the coming week at the Louisiana Legislature. The industry has offices all over the place, sometimes three at the same location. Obviously, there is a demand for their services, but at what cost?

Those are short-term, highinterest loans that are based on the borrower’s next paycheck. A person can get a quick $100 loan to help pay his bills by writing a postdated check, including the interest, that the loan office agrees not to cash until payday. The interest on that $100 varies, but it has been reported that a typical loan of that amount costs $30 in interest, which is more than 780 percent annually.

Industry spokesmen deny the rates are that high. Troy McCullen, the owner of 31 pay day loan locations in Louisiana, said state law prohibits much of what the companies are alleged to be doing.

Two bills that will be heard at the Legislature should help clear the air, but their sponsors insist the industry definitely needs tougher regulations. Most of the citizens who take out pay day loans are already in desperate financial situations and don’t need to get deeper in debt.

A number of organizations are pushing for tighter controls. They include AARP Louisiana, the Louisiana Budget Project, Habitat for Humanity, Catholic bishops, ministers and community organizers and United Way of Southeast Louisiana. They make up the Louisiana Coalition for Responsible Lending.

Together Baton Rouge, another member, said Louisiana families paid over $196 million in fees and interest on pay day loans in 2011 and 57,000 households take out loans each year.

Senate Bill 84 by Sen. Ben Nevers, D-Bogalusa, is scheduled for a Tuesday hearing before the Senate Commerce Committee. A similar measure (House Bill 239) has been filed by Rep. Ted James, D-Baton Rouge. They want to cap the annual interest rate at 36 percent.

The Louisiana House Democratic Caucus said the state has one of the highest concentrations of pay day loan storefronts in the nation, with more than four of them for every McDonald’s. Jan Moller, executive director of the Budget Project, told The Advocate there are some 1,000 storefront pay day lenders operating in Louisiana.

James said, “State law allows pay day lenders to get away with charging customers interest rates of more than 300 percent, compared to 24 percent for credit cards. These outrageous interest rates trap many hard-working people into long-term debt.”

When those who borrow don’t repay the loans, they really get into deep debt. The Budget Project said on average, borrowers recycle loans nine times, which translates to paying $270 in fees on a $100 loan. They pay fees to renew their loans and then renew them again and again, or take out more pay day loans.

The proposed legislation would prohibit lenders from rolling over the loans and improve the way loans are handled.

The last serious effort the Legislature made to tighten controls on pay day loans came in 1999. Foster Campbell, a current member of the Louisiana Public Service Commission and former state senator, wanted to limit the annual interest rate to 72 percent. He said the prime interest rate at the time was 7.75 percent.

“If you can’t make it on nine times the prime, I feel sorry for you,” Campbell said at the time.

State Rep. John Travis, D-Jackson, had a House bill in 1999 that set the annual loan rate at 180 percent, which was 16.75 percent for the two- to fourweek life of the loans. He said it was deceiving to compare interest rates because the loans are short-term transactions. His bill passed unanimously and he was opposed to the 6 percent rate that was approved by the Senate.

“Anybody who votes to kill this bill (with the 16.75 percent) wants things to continue as they are,” Travis told House members. He won out in the end.

The Associated Press in 2000 said before the change pushed by Travis it was routine for borrowers to pay $45 in fees to get $201 for 14 days, which translates to an annual percentage rate of 583.7 percent. Under the Travis bill, a lender could charge up to $40.44 on the same loans, or an annual rate of 523.1 percent, not much of a change.

Fees are another problem. There was an effort to curb them in 1999, but legislators took action in 2010 that allowed increased fees.

Some who take out pay day loans don’t want the government to get more involved. And the industry said tougher regulations will drive their customers to loan sharks. However, some critics of the loans believe the pay day companies are loan sharks themselves.

LaPolitics Weekly reported last week the pay day loan bills are the most “lobbied up” measures at the legislative session so far. It said at least 40 lobbyists representing the companies met for a strategy session. So, you know we are talking big bucks here.

Most legislators in office in 1999 supported the bills by Campbell and Travis, because they made some improvements in the pay day loan business. However, Travis wouldn’t agree to any major changes. We will soon find out how serious legislators are this time around about reforming a loan system that takes unfair advantage of people who are already down on their luck.

Cebu city mayor proposes cash aid for City Hall staff; Margot asks where money will come from

9:59 am | Tuesday, December 17th, 2013

After twin calamities that struck Cebu in October and November, Cebu City Mayor Michael Rama wants to give a cash dole out to cheer up the city government’s 4,000 regular and casual employees.Instead of calling it an”extra cash gift” for Christmas, he’s proposing P20,000 each as “calamity financial assistance.”The amount will be charged to the P140.3 million Supplemental Budget No. 3 which he submitted last Friday for the City Council to include in its agenda for tomorrow’s session.But where will the city get the money to fund SB3?“We have to know if we have actual funds available to pay the assistance,” said City Councilor Margo Osmeña, who heads the budget committee.The summary of appropriations signed by Rama and budget officer Nelfa Briones cited P64.5 million in savings from “interest expense” of the city’s loan with the Land Bank of the Philippines (LBP) for the implementation of the South Reclamation Project now known as the South Road Properties (SRP).Another P45.9 million is identified from savings from the city’s “gain/loss on foreign exchange” while the remaining P29.9 million will come from personal services savings.Councilor Osmeña, however, was skeptical.“I do not even know whether such an account exists (for interest expense and gain/loss on foreign exchange). Where is this under the city’s General Funds?,” she asked.Last week, Gov. Hilario Davide III announced the approval of a P20,000 cash gift and a sack of rice for the Capitol’s regular staff, which raised expectations of counterparts in City Hall who look forward to a Christmas bonus.Councilor Osmena said she wanted to know why this year’s cash gift to employees is called “calamity assistance” when not all employees were affected by the earthquake or the typhoon.Last year, the Cebu city government released a P12,000 as extra cash gift for its 4,200 regular and casual employees and P10,000 in 2011.Rama’s P140 million Supplemental Budget NO. 3 will be presented on first reading on Wednesday, the the last regular session of the City Council before they go on Christmas break.But Osmeña said they may have to hold a budget hearing and special session after Wednesday’s session to work on SB3.“Whichever will be feasible, this (the calamity financial assistance) will have to be available before Christmas barring any circumstance,” said Rama.Rama said the City Council would have to answer to employees if they don’t approve the cash aid before going on Christmas break or reduce the P20,000 he’s proposing.“Mas maayo pa mopuno sila,” he said. (It would be better if they increase the amount.)OIC City Treasurer Diwa Cuevas said job order personnel don’t qualify for the cash assistance because “they do not have an employee-employer relations with the city.”Members of City Hall’s Program on Awards and Incentives for Service Excellence (Praise) committee passed on December 11 a resolution recommending to Mayor Rama the release of P20, 000 calamity assistance to employees following the October 15 earthquake and the November 8 typhoon Yolanda.Rama used this as basis for the P61.1 million outlay for the aid in SB3.The mayor also reintroduced in his SB3 a total of P48 million for allowances of judges and law enforcers, NBI agents, police and firemen assigned in the city and another P6.3 million for the payment of terminal leave benefits to 27 City Hall employees.The allowances and aid to the judiciary was included in his SB2 but the council opted to forgo the appropriation because of lack of a valid fund source for the purpose.Rama is also asking P16 million in SB3 to pay for the salaries of Job Order personnel assigned in the city’s garbage disposal program. /Doris C. Bongcac, Chief of Reporters

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